PETALING JAYA: Individual taxpayers who have received Instalment Payment Notices (CP500) will not be subjected to penalties this year, says the Inland Revenue Board (LHDN).
It said this is to give individual taxpayers with income from employment and non-employment sources, such as rental, interest and royalties, time to properly comply with CP500 requirements for the 2026 Assessment Year (AY).
“This measure is in line with the government’s decision to provide a transition period for these individual taxpayers.
“As such, during this transition period, no penalties will be imposed even if taxpayers do not make CP500 instalment payments.
“However, taxpayers are still encouraged to make voluntary CP500 payments to help reduce their outstanding tax liability when filing the Income Tax Return (ITR) later,” LHDN said in a statement yesterday.
It added that taxpayers with only employment income are not required to comply with the instalment payment directive.
However, these taxpayers are still advised to update their income reporting in the ITR for AY 2025 to avoid receiving CP500 instalment notices in the future.
“We will also contact affected taxpayers to clarify any income reporting errors in previously submitted ITRs,” it added.
For taxpayers wanting to revise their CP500 instalment amounts via Form CP502, LHDN said the first application for revision must be submitted by June 30, 2026, while the second revision must be submitted by Oct 31, 2026.
“LHDN encourages taxpayers to accurately and correctly report their income in the ITR to ensure more efficient and orderly tax management.
“We remain committed to strengthening support and guidance for taxpayers to facilitate transparent and efficient fulfilment of tax responsibilities,” LHDN said.
